Mumbai: On 11th May, Despite improvement in asset quality and a massive rise in the treasury income, state-owned Bank of Baroda reported 48 percent plunge in net profit at Rs 598.36 crore for the quarter ended March 31 as its tax and other statutory provisions soared.
Higher provisionings have whittled down the spike in treasury income.
During the fourth quarter of 2014-15 fiscal, the bank reported a healthy 69 percent rise in treasury gains to Rs 605 crore from Rs 359 crore a year-ago.
But the fee income growth was tepid with an increased to Rs 429 crore from Rs 419 crore.
In spite of such a fall in net income, the market lapped up the BoB counter, which topped the gainers chart today.
The scrip rallied a massive 16.9 percent to Rs 169.65 on the BSE which jumped 1.5 percent to 27,507.30.
During the intra-day the BoB stock had rallied 22 percent.
Traders said investors are happy about the improvement in the asset quality of the bank, which showed marginal improvement during the quarter.
"There was a deferred tax liability on our bad debts. This has been disallowed now.
Consequently our effective tax rate has moved to 28 percent which used to be 17-18 percent earlier, and this led to higher provisioning," BoB managing director and chief executive Ranjan Dhawan told reporters.
Accordingly, the bank's tax provision increased by 9.50 percent to Rs 277.68 crore in the quarter, against Rs 253.58 crore in the year-ago period.
Gross non-performing assets marginally improved to 3.72 percent from 3.85 percent in the previous quarter, while net NPAs were down 1.89 percent from 2.11 percent.
Net interest margin of the bank stood at 2.17 percent in the reporting quarter and the bank expects NIM to remain at the same level in the current fiscal.
"Our NIM was impacted by our overseas operations where the loan book is mostly buyers credit or credit finance. The market for this has shrunk and that is why our margin has taken a hit," Dhawan said.
"Going forward we have to alter our loan mix and probably we will have to go for term lending for two-three years rather than just credit finance," he added.
During the quarter, the bank restructured Rs 4,000 crore of loans while fresh slippages rose to Rs 1,359 crore from Rs 1,214 crore.
The banks provision coverage ratio declined to 64.99 pe cent as against 65.45 percent last year.
The bank is expecting a 14-15 percent growth in loan and deposits in the current year.
Its Casa deposits grew by 11.25 percent to Rs 1,62,969 crore in FY15 with the share of domestic Casa showing improvement to 33.01 percent at end-March.
The retail credit grew by 14.06 percent to Rs 52,488 crore and formed 17.51 percent of total domestic credit.
"There was a more-than-expected improvement in the asset quality during the quarter," Dhawan said. However, he expects pressure on the asset quality to remain for the next six months.
In fact, the lender's non-tax provisions jumped more, eating into its bottomline. Non-tax provision soared 58 per cent to Rs 1,818 crore in the quarter as against Rs 1,153 crore last year, the bank said.
For the full year, the bank's net profit declined by 25 percent to Rs 3,398 crore from Rs 4,541 crore year ago.
Total income rose 3.81 percent to Rs 12,057 crore in the fourth quarter from Rs 11,615 crore in the same period last year.
